Tax breaks to reconstruct no-go zone?

November 22, 2016

Tax breaks mulled to aid reconstruction in Fukushima no-go zone

JIJI

The Abe government and ruling coalition are considering giving tax breaks to companies that do business in reconstruction footholds to be set up in the no-go zone heavily contaminated by the 2011 nuclear accident in Fukushima Prefecture, according to informed sources.

Officials believe such measures will help advance industrial recovery in the prefecture hurt by the reactor meltdowns at the Fukushima No. 1 power plant in March 2011, the sources said Tuesday.

Under consideration are corporate tax cuts to promote capital investment and employment of people affected by the crisis by firms damaged by the nuclear accident and companies that newly expand into the area.

The special reconstruction areas will be created starting in fiscal 2017. Priority will be given to decontamination work and infrastructure development in the footholds, so that evacuation orders for local residents can be lifted around the end of March 2022.

The tax measures will be included in the fiscal 2017 tax system reform package that the Liberal Democratic Party-led ruling coalition plans to draw up Dec. 8.

Similar tax breaks are provided in evacuation areas outside the no-go zone. Through the planned measures, the government hopes to encourage the opening of businesses necessary for residents to live in the area, such as convenience stores and gas stations, as well as promoting job creation.

The government and the ruling camp are considering the options of allowing companies to deduct from their corporate taxes 15 percent of the amounts of their capital investment made in the footholds and granting lump-sum depreciation of new equipment and facilities so they can reduce their taxable incomes by larger margins than under regular depreciation rules.

Another possible measure is giving a corporate tax cut equivalent to 20 percent of salaries for employees in the footholds that companies hire from among those affected by the nuclear accident.

Also under consideration extending by four years a corporate tax cut granted to the owners of housing for disaster victims in special economic zones on condition the buildings meet fire resistance and other requirements and that the owners give priority to disaster-affected people in choosing tenants.